TMI Tax Updates - e-Newsletter
March 29, 2024

Case Laws in this Newsletter:

TMI Short Notes

1. Navigating the Bounds of Tax Law: Supreme Court's Verdict on Section 153-C Assessments

  Income Tax:

2. The Delhi High Court's Guiding Light on Post-Search Tax Assessments: Application of Section 153C, powers of tax authorities and the rights of assessees.

  Income Tax:

3. Navigating Legal and Procedural Hurdles: A Charitable Institution's Quest for Tax Exemption and Registration u/s 12A and 80G

  Income Tax:

Articles

1. Assessment Order issued without taking into consideration reply filed by the Assessee is not valid

   By: Bimal jain

2. PRESUMPTIVE TAXATION FOR BUSINESS OF PLYING OR HIRING OR LEASING GOODS CARRIAGES UNDER SECTION 44AE

   By: DR.MARIAPPAN GOVINDARAJAN

3. Assessee is entitled to interest from the date immediately after the expiry of sixty days from the date of receipt of the GST refund application

   By: Bimal jain

News

1. Combined Index of Eight Core Industries increases by 6.7% (provisional) in Feb 2024 as compared to Index of Feb 2023

2. Monthly Review of Accounts of Government of India upto February, 2024 for Financial Year 2023-24

Notifications

GST - States

1. 04/2024-State Tax - dated 5-3-2024 - Gujarat SGST

Notifies special procedure by a registered person engaged in manufacturing of the certain goods

2. S.O. 152 - dated 7-3-2024 - Jammu & Kashmir SGST

Seeks to rescind Notification S.O. No. 546/2023-Tax, dated the 19th October, 2023

3. S. O. 153 - dated 7-3-2024 - Jammu & Kashmir SGST

Seeks to notify special procedure to be followed by a registered person engaged in manufacturing of certain goods

4. 14/2023 – State Tax (Rate) - dated 5-3-2024 - Jharkhand SGST

Amendment in Notification No. 13/2017-State Tax (Rate), dated the 29th June, 2017

Income Tax

5. 37/2024 - dated 27-3-2024 - IT

Income-tax (Fifth Amendment) Rules, 2024

Circulars / Instructions / Orders

Customs

1. PUBLIC NOTICE NO. 33/2024 - dated 20-3-2024

Certain FTA certificate verification in TSK under CAROTAR Rules-2020-reg.

Highlights / Catch Notes

GST

• Bail Granted in GST Offence Case: Court Considers Completed Investigation, No Criminal History, and Ongoing Trial.

  Case-Laws - HC : Seeking grant of regular bail u/s 439 of CrPC - Offence punishable u/s 132(1)(i)(i) of GST Act - bogus purchasers - GST registration was either suspended or cancelled - The High Court of Chhattisgarh granted bail to the applicant in a case related to alleged GST offences, considering factors such as completion of investigation, lack of criminal antecedents, and ongoing trial proceedings. The Court imposed conditions to ensure the applicant's compliance with legal obligations during the bail period. It also urged the trial court to expedite the trial process, emphasizing the importance of timely justice delivery.
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• University Wins Battle to Restore GST Registration After Unjust Cancellation; Court Orders Reinstatement.

  Case-Laws - HC : Seeking to revoke the cancellation of GST registration - The petitioner, a university, contended that despite fulfilling tax obligations and filing returns until a certain period, their registration was cancelled, allegedly infringing upon constitutional rights and principles of natural justice. The court noted a delay in submitting returns but recognized the petitioner's efforts to rectify the situation by promptly clearing outstanding dues. While the petitioner had not submitted a specific application for revocation as required by law, they undertook to do so within a stipulated timeframe. Considering precedents emphasizing caution in cancelling GST registrations, the court adopted a pragmatic approach, ultimately allowing the petition and directing the restoration of GST registration.
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• High Court Quashes Tax Demand Order, Ensures Fairness for Fabric Dealer to Contest and Address Discrepancies.

  Case-Laws - HC : Validity Of Show cause notice - The case pertains to a dealer of woven fabrics and readymade garments challenging a tax demand order due to allegedly insufficient opportunity to contest. Despite delay in response to a show cause notice, subsequent communication and evidence submission by the petitioner suggest efforts to refute discrepancies and comply with requirements. The Government maintains adherence to procedural fairness but acknowledges the petitioner's subsequent explanations for discrepancies. The High Court intervenes, quashing the order subject to conditions ensuring procedural fairness and opportunity for the petitioner to address the tax demand.
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• Court Quashes Tax Order, Allows 10% Deduction; Taxpayer Gets 3 Weeks to Respond, New Orders in 2 Months.

  Case-Laws - HC : Validity of Tax demand - Non consideration of reply submitted by the petitioner / assessee - The High Court found merit in the petitioner's contentions. It quashed the impugned orders and directed the respondent to appropriate 10% of the disputed tax demand from the petitioner's bank account. Additionally, the petitioner was granted three weeks to submit a reply to the show cause notice, and upon satisfaction of the payment and receipt of the reply, the Assessing Officer was directed to provide a reasonable opportunity for further proceedings and issue fresh orders within two months.
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• Order Quashed: Delayed Service and Hearing Issues Breach Natural Justice in CGST Case, Remanded for Reconsideration.

  Case-Laws - HC : Violation of Principles of natural justice - The High Court, upon examining the petition, found that the order-in-original passed by the Commissioner, CGST & Central Excise, Belapur, was in breach of the principles of natural justice. It noted discrepancies in the scheduling of personal hearings and the delayed service of the order on the petitioner. Considering these factors, the High Court quashed the impugned order and remanded the proceedings to the respondent for fresh orders.
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• Jurisdictional Issues in GST Investigations: Court Quashes Improper Proceedings, Allows Fresh Actions Within Legal Limits.

  Case-Laws - HC : Proper officer - Jurisdiction of Initiate investigation proceedings by the Central GST and State GST authorities simultaneously - cross-empowerment - The Court found that in the absence of specific notifications enabling cross-empowerment, except for purposes related to tax refunds, the proceedings initiated by an authority (either Central or State) against taxpayers not assigned to them are without jurisdiction. - While the Court quashed the impugned proceedings for lacking jurisdiction, it also directed the respective authorities (Central or State) to whom the petitioners are administratively assigned to initiate fresh proceedings, if warranted, in compliance with the applicable laws and regulations. The period during which the impugned proceedings were initiated and pending litigation was to be excluded from the calculation of any limitation period for initiating new proceedings.
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• Petition for Tax Refund Denied: Court Finds Payments Voluntary, Not Coerced; Detailed Evidence Needed in Civil Suits.

  Case-Laws - HC : Seeking refund of amount deposited - department coerced to deposit the tax amounts - The High court found the petitioner's claim of coercion unsubstantiated, highlighting evidence of voluntary payment and the petitioner's failure to raise complaints regarding coercion. The court emphasized that determining coercion versus voluntary payment involves disputed factual questions beyond the scope of writ proceedings. It asserted that such determinations require extensive evidence analysis, akin to civil suits, which cannot be conducted in summary proceedings under Article 226.
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• Court Orders Credit Transfer for GST Error, Mandates Fix for Auto-Generated Non-Migrated GST Numbers.

  Case-Laws - HC : Seeks to refund the GST - deposited against the non-migrated GST - The petitioner argued that they had only been using the migrated GST number and were surprised to discover the existence of the non-migrated GST number with a significant credit balance. The respondent acknowledged the technical error that led to the automatic generation of the non-migrated GST number but argued that there was no provision for transferring credit between GST numbers. - The High Court, considering the unique circumstances of the case, directed the transfer of the credit from the non-migrated GST number to the migrated GST number of the petitioner. Additionally, it ordered the authorities to address the issue of automatic generation of non-migrated GST numbers and take corrective action within a specified timeframe.
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• Court Allows Correction of Mistaken Credit; Appellants to Submit Correct Form with Assistance from IT Grievance Officer.

  Case-Laws - HC : Availment of wrongful credit - bonafide mistake - The High Court observed that the mistake made by the appellants was inadvertent, and despite the acknowledgment of the error by the adjudicating authority, the demand was confirmed without providing any guidance or assistance to rectify the error. Considering previous legal precedents and the transitional phase of legislation, the court directed the authorities to enable the appellants to rectify the mistake and submit the correct form within a specified timeframe. Additionally, the Nodal Officer of IT Grievance Redressal Mechanism was directed to facilitate the filing process and provide options for manual rectification if necessary.
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• Relief Sought for Additional Tax Liabilities on Govt Contracts Affected by GST; Decision Pending in West Bengal.

  Case-Laws - HC : In the case before the Calcutta High Court, the petitioner sought relief regarding the additional tax liabilities arising from government contracts, irrespective of whether they were awarded before or after the introduction of GST. The court allowed the petitioner to file a representation before the Additional Chief Secretary, Finance Department, Government of West Bengal within four weeks. The Additional Chief Secretary is required to make a final decision within four months after consulting relevant departments and considering the petitioner's arguments. Until a decision is made, no coercive action can be taken against the petitioner.
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Income Tax

• Income Tax Rules Update 2024: New Forms ITR-V and ITR-Ack Replace Old Versions Starting April 1, 2024.

  Notifications : The Income-tax (Fifth Amendment) Rules, 2024, introduced through this notification, come into effect from April 1, 2024. The key amendment highlighted in the notification revolves around the substitution of two forms within Appendix-II of the Income-tax Rules, 1962 i.e. Substitution of FORM ITR-V and Substitution of FORM ITR-Ack.
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• Tribunal Backs Assessee on Section 14A Disallowance, Expatriate Salary, and Transfer Pricing Adjustments.

  Case-Laws - AT : The Tribunal meticulously analyzed each issue, heavily relying on precedent ITAT decisions and the specifics of the case presented. For the major contentious points, such as disallowance under section 14A and the deduction of salary to expatriate employees, the Tribunal sided with the assessee, providing detailed rationales based on prior rulings and the facts of the case. Similarly, for transfer pricing adjustments and the methodological disputes therein, the Tribunal preferred the assessee's approach, especially highlighting the inappropriate application of the Comparable Uncontrolled Price (CUP) method by the Transfer Pricing Officer (TPO) in the context of interbank indemnities.
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• Tax Exemption for National Mission for Clean Ganga on Grants and Interest for Non-Commercial Activities.

  Notifications : Notification No. 36/2024 grants tax exemption to the National Mission for Clean Ganga (NMCG) for specified incomes, including grants-in-aid and interest earned on bank deposits. The exemption is subject to conditions ensuring non-commercial activities, unchanged nature of specified income, and compliance with tax filing requirements. Effective for assessment years 2021-2024.
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• High Court Upholds Tribunal's Decision, Dismisses Challenge to Quashed Charge Memo Against Former Tax Commissioner.

  Case-Laws - HC : Validity of Charge memo issued to CIT(A) - The case involved a challenge to an order issued by the Central Administrative Tribunal, which had quashed a charge memo against the respondent, a former Commissioner of Income Tax (Appeals). The petitioners alleged that the respondent had wrongly decided five appeals during his tenure, prompting the issuance of the charge memo in 2014. However, the High Court found that the delay of over ten years in issuing the charge memo was unjustified and could prejudice the respondent's defense. Despite arguments regarding the applicability of previous court decisions and the nature of the respondent's duties, the Court upheld the Tribunal's decision and dismissed the writ petition.
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• Court Allows Appeal Without Pre-Deposit; Orders CIT (Appeals) to Expedite Under Income Tax Act Notification.

  Case-Laws - HC : Exemption from Pre-deposit - The petitioner argued that their request for exemption from pre-deposit was wrongly rejected, and they challenged the jurisdiction of imposing liability. The court, after considering the submissions and relevant provisions of the Income Tax Act, directed the CIT (Appeals) to decide the appeal expeditiously without insisting on the pre-deposit. The court emphasized compliance with Notification and Instruction No. 1914 issued under Section 220 of the Income Tax Act. However, the judgment did not delve into the specifics of the jurisdictional challenge raised by the petitioner.
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• Court Invalidates Reassessment Notice Due to Lack of New Material, Citing Change of Opinion in Tax Case.

  Case-Laws - HC : Validity of reopening of assessment - clandestine and unaccounted sales - The High Court reviewed a petition challenging the rejection of objections to a notice for reassessment under the Income Tax Act. The petitioner argued that the reassessment was based on a change of opinion rather than a mistake. The court examined the assessment procedure and found that the reasons for reopening the assessment did not indicate the discovery of new material but rather a potential change of opinion. - Consequently, the court quashed the impugned order and notice, ruling in favor of the petitioner.
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• Tribunal Confirms Validity of Assessment Order; High Court Dismisses Appeal, Finding No Legal Question Arises.

  Case-Laws - HC : Revision u/s 263 - The Tribunal concluded that the assessing officer had conducted a reasonable inquiry into the relevant issues, and the assessment order was neither erroneous nor prejudicial to the interests of the Revenue. Despite the discrepancy between the intended scrutiny and the actual assessment, the Tribunal upheld the validity of the assessment order. Additionally, the Tribunal rejected the application of Instruction No. 9/2007, stating its inapplicability to the case at hand. - In light of the findings, the High Court dismissed the appeal, as it found no question of law arising from the impugned order.
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• High Court Rules No Penalties for Bona Fide Deduction Claims; Dismisses Revenue's Appeal on Income Disclosure.

  Case-Laws - HC : Penalty u/s. 271(1)(c) - The Revenue argued that the assessee's actions constituted furnishing inaccurate particulars of income or concealing income. However, the High Court disagreed, ruling that the claim for deductions was bona fide and directly linked to the business profit. They emphasized that the mere rejection of a claim by the Assessing Officer does not automatically result in the imposition of penalties under Section 271(1)(c). Therefore, the High Court concluded that no substantial questions of law arose from the case and dismissed the appeal of the Revenue.
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• Court Upholds Authority to Rectify Errors in Agricultural Income Assessment u/s 154, Dismisses Petition.

  Case-Laws - HC : Rectification of mistake u/s 154 - limited scrutiny of “Agricultural Income” - The High Court deliberated on the challenge to an Impugned Notice issued u/s 154 - It examined the contentions of both parties regarding the jurisdiction of the Assessing Officer and the scope of rectification u/s 154. Finding that certain issues raised in the notice were not addressed in the original Assessment Order, the Court affirmed the jurisdiction of the Assessing Officer to rectify such errors. It emphasized that the power to rectify extends to mistakes of fact or law apparent from the record. Ultimately, the Court dismissed the writ petition, upholding the validity of the Impugned Notice and allowing for further proceedings.
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• High Court Dismisses Appeal on Business Repair Expenses, Calls for Review on Deductibility of Trust Donation.

  Case-Laws - HC : The case involved challenges to the disallowance of expenses on repairs and maintenance and a donation to a trust. The appellant argued that both expenses were incurred for business purposes and should be allowed as deductions. The opponents contended that the expenses were not wholly and exclusively for business and should be disallowed. The Tribunal ruled in favor of the appellant on both issues, finding the expenses to be revenue in nature and made for commercial expediency. The High Court dismissed the appeal on the repairs and maintenance issue but admitted the appeal on the donation to the trust, indicating a need for further consideration.
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• Appellate Tribunal Rules Technical Collaboration Fees as Non-Taxable Business Profits Under India-Mauritius Tax Treaty.

  Case-Laws - AT : Income taxable in India or not - Taxation of Technical Collaboration Fees @ 10% u/s. 9(1)(vii) r.w.s 115A(1)(b) - The Appellate Tribunal considered the arguments presented by both parties and examined relevant provisions of the Income Tax Act and the India-Mauritius tax treaty. It noted that the assessee, being a foreign company, did not have a permanent establishment (PE) in India. Additionally, there was no specific clause in the tax treaty addressing the taxability of the income in question. - ITAT held that in the absence of a permanent establishment and specific treaty provisions, the income should be treated as business profits and is not taxable in India.
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• Charitable Institution Wins Tribunal Ruling for Provisional Approval u/s 80G, Ensuring Tax Benefits Continuation.

  Case-Laws - AT : Rejection of application for final approval u/s 80G(5)(iii) - The appellant, previously approved under Section 80G(5) of the Income Tax Act as a charitable institution, sought final approval following an amendment. Despite applying for provisional approval and subsequently for final approval, the application was rejected by the CIT(Exemption). The Tribunal clarified the interpretation of statutory provisions, emphasizing the application process for final approval and the applicability of CBDT Circulars. It held that the commencement of activities before provisional approval did not hinder the application process. The Tribunal directed the grant of provisional approval to the appellant and ensured the continuation of benefits under Section 80G of the Act.
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• Tribunal Rules Section 80G Application Deadlines Directory, Not Mandatory, Amid COVID-19 Hardship Extensions.

  Case-Laws - AT : Rejection of approvals u/s 80G - approval application filed belatedly - The Tribunal noted that the CBDT had extended deadlines for filing applications for registration or approval in light of genuine hardships faced by charitable entities. This was a significant consideration, indicating a recognition of practical difficulties and an intent to mitigate them. The Tribunal held that the timelines prescribed under clause (iii) of the first proviso to section 80G(5) should be treated as directory rather than mandatory, especially in light of the transitional nature of amendments introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. (TOLA)
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• Tribunal Prefers TNMM for Transactions, Clarifies Tax Rate on Foreign Loans, and Interprets India-Canada DTAA on Tax Refunds.

  Case-Laws - AT : Transfer Pricing Adjustments - The Tribunal reaffirmed the primacy of the TNMM over CUP for benchmarking certain types of transactions, especially when comparable data for CUP is not readily available or applicable. - The ruling emphasized the reduced rate of taxation on interest income from foreign currency loans under specific conditions, thereby clarifying the applicability of section 115A over normal tax rates. - The allowance of deductions under section 44C was confirmed, highlighting the importance of adhering to the statutory limits and maintaining proper documentation to support such claims. - Lastly, the Tribunal's interpretation of the India-Canada DTAA in the context of taxability of interest on income tax refunds signals a broader understanding of DTAAs' provisions, particularly regarding the exemptions available to non-residents.
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• Reassessment Order Invalidated: Tribunal Upholds Income Tax Settlement Commission's Decision on Water Pipeline Project Income.

  Case-Laws - AT : Validity of assessment order passed u/s 153C/143(3) against Settlement Commission order - The Tribunal found the reassessment to infringe upon the principles laid out by the ITSC, which had already settled the income at 8% of the receipts from the water pipeline project. The reassessment was deemed impermissible in law, rendering the impugned order dated 30.12.2019 passed u/s 153C/153A/143(3) as invalid. Consequently, all additions made therein were deleted.
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• Tribunal Rules on Income Estimation, Validity of Reopening Assessments, and Genuine Purchases in Diamond Trading Case.

  Case-Laws - AT : Estimation of income - bogus purchases - The Tribunal addressed various issues, including the validity of the reopening of assessment, the genuineness of purchases, calculation of the profit element, and determination of the gross profit rate. It found that the purchases were reconciled with sales, indicating their genuineness. Relying on judicial precedents, the Tribunal concluded that only the profit element of the alleged bogus purchases should be assessed. It accepted the industry-standard gross profit rate of 3% for diamond trading and modified the CIT(A)'s order accordingly, restricting the addition to the profit element.
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• Tribunal Orders Reassessment of Capital Gains Valuation, Addressing Brokerage and Stamp Duty Discrepancies.

  Case-Laws - AT : Calculation of Capital Gain - Non-Resident - Applicability of section 144C - eligible assessee - The appellant contested the rejection of their valuation report and the adoption of circle rates, arguing that the valuation report should have been relied upon. Discrepancies in the calculation of capital gains, particularly concerning brokerage expenses and stamp duty, were also highlighted. The Tribunal found merit in several of the appellant's arguments, directing the AO to reconsider certain aspects and providing relief to the appellant.
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• Payments to Non-Resident Telecom Operators for Bandwidth Services Not Taxable as Royalty/FTS, High Court Rules.

  Case-Laws - AT : TDS u/s 195 - payments made to its Non-Resident Telecom Operators (NTOs) for provision of bandwidth capacity and provision of interconnect services - The Tribunal referred to previous proceedings involving the payer (the domestic entity making the payments), where it was initially held that the payments constituted Royalty/FTS and were taxable under section 9 of the Act. However, this decision was later overturned by the jurisdictional High Court, which ruled that the payments were not Royalty/FTS. Relying on the High Court's judgment, the Tribunal concluded that the payments could not be taxed in the hands of the assessee under section 9 of the Act or the relevant DTAA. Therefore, the CIT(A)’s decision to allow the appeal of the assessee was upheld.
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Customs

• Court Validates Seizure of Swiss-Marked Gold Bars Under Customs Act; Upholds Sworn Statements Despite Retractions.

  Case-Laws - HC : Smuggling - Gold, with Swiss markings - Contraband item - Validity of Seizure and Evidentiary Value of the Sworn Statement - The court found the seizure to be valid under the Customs Act, emphasizing the evidentiary value of the sworn statement made under Section 108 of the Act. Despite the later retraction of this statement, the court deemed other material evidence sufficient to support the initial findings. - The Swiss markings on the gold bars were deemed conclusive evidence of their foreign origin. The appellants successfully demonstrated that the respondents failed to establish a legal importation pathway for the gold into the country, thus justifying the seizure. - The High Court set aside the orders of the Appellate Authorities, restored the order of the original authority, and allowed the appeal in favor of the revenue-appellant with specified costs.
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• Couple's Undeclared Gold Bangles Confiscated at Customs; Court Upholds Seizure and Imposes Fines for Violation.

  Case-Laws - HC : Smuggling - Gold - baggage rules - The petitioners, a husband and wife, returned to India from the United States and were stopped by customs officials upon arrival. The officials found the wife wearing five gold bangles, which had not been declared. The petitioners claimed the bangles were a gift from their daughter. - The High court categorized the gold bangles as restricted items under customs laws, emphasizing that failure to declare such items amounts to their prohibition. - The court found that the petitioners' failure to declare the gold bangles constituted a violation of customs laws, as they exceeded the permissible limits for duty-free importation. - The court upheld the adjudicating authority's decision to confiscate the gold bangles and impose fines and duties, citing the provisions of the Customs Act and related regulations.
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• Court Orders Transfer of Confiscated Vessel, MSV Safina Al-Miraz, After Issuance of No Due Certificate; Nullifies Encumbrances.

  Case-Laws - HC : Right of the Purchaser of confiscated vessel in an action - Direction to issue No Due Certificate (NDC) in relation to subject vessel MSV Safina Al-Miraz to the Petitioner and permit the Petitioner to shift the Vessel from Salaya Port to Okha Port forthwith - The High Court referred to Sections 115 and 126 of the Customs Act, stating that upon confiscation, the confiscated goods vested in the Central Government. Consequently, any encumbrances, including the mortgage by the GMB, would cease to exist. - Given the legal framework and absence of outstanding dues, the Court directed the GMB to issue the NDC to the petitioner, enabling them to shift the vessel. The rule was made absolute in this regard, with no orders as to costs.
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• Court Denies Reconsideration Request, Upholds Initial Order on Handbook Amendment; Warns Against Misusing Review Process.

  Case-Laws - HC : Seeking review of order - error apparent on the face of record or not - The court acknowledged the existence of the amendment to Paragraph 9.3 of the Handbook of Procedures and recognized its relevance to the case. However, it concluded that the amendment had been duly considered in the earlier order, and there was no error apparent on the face of the record regarding its application. In line with the respondents' argument, the court emphasized that a review cannot be used as a disguised appeal. It cited a Supreme Court decision that cautioned against exceeding jurisdiction in review applications and reiterated the principle that a review cannot reevaluate evidence already considered in the main petition.
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• Jeweler Wins Appeal: Tribunal Orders Return of Seized Gold, Citing Credible Evidence Against Smuggling Claims.

  Case-Laws - AT : Absolute confiscation of gold - The case involved the confiscation of gold by customs authorities from a jeweler, who contested the allegations of smuggling and illegal importation. The appellant provided substantial evidence, including invoices and transaction records, to prove the legality of their gold procurement activities. They argued that the seized gold was domestically sourced and not of foreign origin, highlighting discrepancies in its characteristics. The Appellate Tribunal found merit in the appellant's submissions, criticizing the lower court's reliance on unsubstantiated assumptions. Consequently, the appeal was allowed, and the appellant was granted relief, including the return of seized gold or refund of auction proceeds.
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• Tribunal Rules Importer Qualified for Concessional Duty on Petrol; Highlights Importance of Intent and Compliance.

  Case-Laws - AT : Intention and Compliance with Notification Conditions - Import and sale of Motor Spirit, commonly known as Petrol - Availing of a concessional rate of Countervailing Duty (CVD) - intention' at the time of import - By analyzing the sequence of actions - from the addition of additives post-importation to the payment of differential duty - the Tribunal underscored the procedural intricacies involved in the assessment and re-assessment of imported goods. It was determined that the appellant's actions did not warrant the confiscation of goods or the imposition of penalties, given the fulfillment of the conditions for concessional CVD rates based on the intention at the time of import and the voluntary payment of differential duty.
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• Tribunal Orders Reconsideration on Abrasive Mesh Export Case Due to Inadequate Review and Natural Justice Concerns.

  Case-Laws - AT : Classification of exported goods - Abrasive Mesh - The Tribunal observed that the lower authorities failed to address the Appellant's submissions adequately. Specifically, they did not justify the denial of the Appellant's requests for retesting the sample or for cross-examining the Chemical Examiner. Moreover, they did not provide reasons for the non-disclosure of communications from the relevant entity. Emphasizing the technical nature of the goods' properties and the importance of adhering to principles of natural justice, the Tribunal remanded the case for reconsideration by the adjudicating authority.
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• Tribunal Upholds Revenue's Classification of Imported Goods as Brush Cutters, Emphasizing Commercial Identity and Use.

  Case-Laws - AT : Classification of imported goods - Agricultural Reaper - Spare parts of Reaper - classifiable under CTH 84672900 and 84679900 respectively (Revenue) or under CTH 84331190 and 84339000 respectively? - The Tribunal decisively rejected the appellant's classification under headings for agricultural machinery, instead siding with the Revenue's designation of the goods as brush cutters suited for manual operation. This case underscores the importance of accurately declaring goods based on their most common commercial identity, reinforcing the legal maxim that the essence of classification lies in the goods' predominant use and public perception.
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• Tribunal Overturns RPO Valuation, Supports Appellant's Classification; Dismisses Mis-declaration Penalties.

  Case-Laws - AT : The Appellate Tribunal addressed multiple issues raised in the appeals concerning the classification of Rubber Processing Oil (RPO), enhancement of its imported value, mis-declaration of the country of origin, and the imposition of penalties and redemption fine. On the classification issue, the tribunal found that proper testing methods were not followed by the revenue, leading to the classification of RPO under Chapter Heading No. 27101990 as per the appellant's claims. Similarly, the enhancement of value based solely on consent letters was deemed improper without following due valuation procedures, leading to the decision to set aside the enhancement. Regarding the mis-declaration of the country of origin, the tribunal concluded that no preferential rates of duty were claimed, and any mis-declaration did not impact revenue, thus relieving the appellant of penalties.
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• Tribunal Confirms Imported Goods as Dried Garlic, Dismissing Misclassification Claims and Avoiding Penalties.

  Case-Laws - AT : Levy of penalty - Misclassification - nature of imported goods as Dried Garlic or not - Regarding the classification of the goods, the Tribunal upheld the appellant's argument, stating that the mention of "Garlic Bulbs" did not determine whether the garlic was dried or not. - The Appellate Tribunal found no evidence of misdeclaration by the appellant. The physical verification and test reports supported the appellant's claim that the imported goods were indeed Dried Garlic. The Tribunal dismissed the department's contention based on terminology and classification, emphasizing that the goods conformed to the declared classification. - No penalties.
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• Tribunal Affirms Proportional Penalty for Delay in Document Submission, No Intentional Delay or Revenue Impact Found.

  Case-Laws - AT : Levy of penalty for delay in Submission of Documents - finalization of the provisional assessments - The Tribunal acknowledged the delay in document submission but noted that eventually, all necessary documents were provided for finalization of the provisional assessments. Citing precedent cases, the Tribunal emphasized that penalties should be proportionate to the offense and that there was no evidence of deliberate delay or revenue implication in this case. The Tribunal found that the penalty of Rs.20,000 imposed by the adjudicating authority was sufficient, considering that the required documents were eventually submitted.
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DGFT

• New Guidelines for Exporting Info Security Items: Apply via SCOMET, Avoid Military Use, Ensure Compliance to Avoid Penalties.

  Circulars : The DGFT issued Public Notice No. 53/2023, notifying the procedure for General Authorization for Export of Information Security items (GAEIS) under Category 8A5 Part 2 of SCOMET. - Key conditions include the submission of detailed applications through the online SCOMET portal, providing end-user certificates (EUCs), maintaining records, and adhering to post-reporting requirements. GAEIS will not be issued for items intended for military applications or to countries/entities under UNSC embargo or proliferation concerns. Non-compliance may lead to penalties or suspension/revocation of GAEIS.
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• New Procedure for Export of Telecom Items Under GAET: One-Time Export Without Individual Authorization Now Possible.

  Circulars : The Public Notice No. 52/2023 issued by the DGFT introduces a procedure for General Authorization for Export of Telecommunication items (GAET) under SCOMET Category 8A5 Part I. GAET allows for the one-time export of SCOMET items without individual authorization, subject to specified conditions, application processes, and post-reporting requirements. Non-compliance can lead to penalties, suspension, or revocation of GAET.
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• New Rules Allow Bulk Licenses for Exporting Telecom and Info Security Items Under SCOMET Categories 8A5 Part I & II.

  Notifications : The notification introduces amendments to Para 10.08 of Chapter 10 of FTP 2023, outlining two significant provisions: (1) General Authorization for Export of Telecommunication-related items (GAET): This provision covers items falling under SCOMET Category 8A5 Part I, excluding Software & Technology and items referenced in Para 10.15(I) of the HBP 2023. The export of these items will be governed by the procedure specified in Para 10.15(I) of the Handbook of Procedures (HBP) 2023. (2) General Authorization for Export of Information Security items (GAEIS): This provision applies to Information Security items falling under SCOMET Category 8A5 Part 2, excluding Technology. The export of these items will be regulated by the procedure specified in Para 10.15(II) of the HBP 2023. - The notification states that these amendments grant one-time bulk licenses for the export of Telecommunication-related items and Information Security items under SCOMET Category 8A5.
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Indian Laws

• Court Rules Technical E-Filing Errors Are Curable, Protects Parties' Rights to Legal Remedies Within Limitation Period.

  Case-Laws - HC : Time Limitation - Curable Defect - Electronic Filing Compliance - Procedural Compliances vs. Substantive Rights: - The High Court found that the petitioners complied with the e-filing requirements, evidenced by the generation of an e-filing number. This compliance, despite the subsequent procedural deficiency, was considered as filing within the limitation period. The "Document not serial" error, a result of technical failures, was deemed a curable defect. Importantly, the Court opined that procedural compliances, including those encountered in the e-filing process, should not defeat the substantive rights of the parties. The essence of the ruling was that technical glitches should not bar access to legal remedies, particularly when the initial attempt to file was made within the prescribed limitation period.
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IBC

• Liquidation vs. Resolution: NCLAT Advocates Revival for MSMEs, Emphasizing Balanced Interests Under IBC.

  Case-Laws - AT : Liquidation of the Corporate Debtor - The right of the appellant to propose a revised resolution plan - The judgment highlights the NCLAT's approach to balancing the interests of creditors and debtors within the framework of the IBC, particularly in the context of MSMEs. It reaffirms the principle that liquidation should be a last resort, with a preference for resolution and revival to maintain the entity's contribution to the economy.
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SEBI

• Court Confirms SEBI Recovery Valid; IBC Provisions Do Not Override Without Moratorium; Appeal Dismissed Without Costs.

  Case-Laws - HC : Recovery proceedings by SEBI - Maintainability of provisions of IBC over the provisions of the SEBI Act - The High Court affirmed the decision of the Single Judge, stating that no moratorium was in force during the relevant period. Thus, SEBI's issuance of the impugned certificate was justified. It held that the provisions of IBC do not override SEBI regulations, particularly in cases where no moratorium exists. The High Court did not delve into the question of whether the levy by SEBI constituted a fine or a penalty, leaving it open for consideration in future proceedings. Ultimately, the appeal was dismissed, and no costs were awarded.
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Service Tax

• Court Rules Rejection of Application Under SVLDRS 2019 Unjustified; Orders Reconsideration of Petitioner's Case.

  Case-Laws - HC : SVLDRS - Rejection of the Petitioner’s Application filed under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Despite repeated directives from the court, the respondent failed to file a reply affidavit within the stipulated time frame, indicating a lack of compliance. However, the court found that the liability had indeed been quantified before the cutoff date, making the petitioner eligible for the scheme. Interpretation of the SVLDRS scheme and relevant circulars supported this conclusion. As a result, the court allowed the writ petition, quashing the rejection of the petitioner's application and directing the department to consider it in accordance with the law.
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• Services to Foreign Universities Qualify as Exports, Not Intermediary; Paid in Foreign Exchange, Direct Assistance Provided.

  Case-Laws - AT : Export of service - “intermediary service” or not - service rendered by the appellant to overseas universities/colleges - The Tribunal found that the appellant's services fit the criteria for "export of services." It noted that the appellant's activities were directed towards promoting foreign universities in India and assisting students with admissions, which directly benefited the universities outside India. Since the services were provided to recipients outside India, for which payment was received in convertible foreign exchange, these activities were deemed exports of services. - On examining the definition of "intermediary services," the Tribunal observed that the appellant did not merely arrange or facilitate the provision of services between two or more persons but provided substantial services on their own account to the foreign universities. Thus, it was determined that the appellant's services did not constitute "intermediary services."
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